The government plans to revise related systems so that funds from institutional investors, including pension funds, will flow into the KOSDAQ market, where individuals' short-term trading has concentrated and speculation has deepened. It also decided to support a shift to a "many births and many deaths" structure in which underperforming companies are quickly delisted from KOSDAQ and the number of listed companies increases so venture and innovation corporations can more easily raise capital.
The Financial Services Commission (FSC) said on the 19th in a presidential policy briefing that it will push next year to implement a "plan to boost trust and innovation in the KOSDAQ market." The move aims to improve conditions so that stable institutional funds can also flow into KOSDAQ to shed its stigma as a "speculators' market," and to help innovation corporations raise the growth capital they need in KOSDAQ.
The government prepared these measures because it judged that the KOSDAQ market is not properly fulfilling its role as a venture capital ecosystem. Although external indicators such as the number of listed companies and market capitalization have grown, the index has stagnated below its level at the time of its 1996 launch as investment trust has declined.
Although successive governments have rolled out various measures to lift the KOSDAQ index, the pattern has repeated of a brief rise followed by a retreat when policy effects faded. Aware of this, the Financial Services Commission (FSC) said, "These measures are intended to enhance trust and innovation in the KOSDAQ market, and are not focused on market revitalization." The aim is not to directly push up the index, but to raise trust and inject innovation to create momentum for the index to rise naturally.
The Financial Services Commission (FSC) first decided to review incentives and improvements to fund management evaluation standards to create conditions for institutional funds, such as pension funds and KOSDAQ venture funds, to enter the KOSDAQ market.
In fund management evaluations, the plan is to reflect the KOSDAQ index at a certain ratio in the benchmark return, which currently specifies only the KOSPI, so that pension funds can consider KOSDAQ when investing in domestic stocks. The Financial Services Commission (FSC) said, "Because this presents a standard for performance evaluation, it does not force pension funds to invest in KOSDAQ."
It also decided to actively consider expanding the 30 million won tax-benefit cap for KOSDAQ venture funds and introducing new tax benefits for business development companies (BDC).
Measures will also be pursued to create a "many births and many deaths" structure in the KOSDAQ market to boost its dynamism. The idea is to bring more high-potential companies into KOSDAQ and to promptly expel underperforming corporations.
To that end, the Financial Services Commission (FSC) will expand the technology special listing criteria—currently limited to the bio sector—to areas such as artificial intelligence (AI), space industry, and energy (ESS and renewable energy), and introduce a customized technology special listing system for core technologies. The Korea Exchange (KRX) will also introduce a sector-specific "technology advisory" system so it can directly assess the technological prowess and growth potential of tech companies and conduct listing reviews.
Preventive measures were also prepared for cases where companies listed via the technology special track become "zombie companies." If a technology special listed company changes its main business during the five-year grace period for delisting exemption to one unrelated to the technology reviewed for listing, it will be added as a ground for delisting review.
The independence and autonomy of the KOSDAQ Division at the Korea Exchange (KRX) will also be further strengthened. The Financial Services Commission (FSC) will establish career and expertise requirements for members of the KOSDAQ Market Committee and revamp the system so that management evaluations of the KOSDAQ Division can be conducted independently from other divisions. It will diagnose the organization and staffing of the KOSDAQ Division and expand and reassign organization and personnel based on the results.